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Smiths City full year profit falls as sales slip

Smiths City Group, the Christchurch-based department store chain, posted a 24 percent decline in annual profit on weaker appliance sales.

Profit was $4.1 million for the year ended April 30, below $5.4 million the year prior, the retailer said in a statement. Sales fell 0.8 percent to $220.7 million.

"This reflects increasing returns through the furnishings side of the retail business, the finance company and the property division offset by a disappointing result from the appliance side of the business," chairman Craig Boyce said. The retailer didn't break out its individual businesses' earnings.

Profit from operations before interest and tax rose to $5.5 million, from $3.8 million, as the company stripped out one-off gains from Canterbury earthquake related tax receipts from the year earlier.

"The comparison of operating surplus after taxation to last year is affected by the timing of the receipt of insurance payments related to the Colombo Street building," Boyce said. "With the earthquake upheaval effectively behind us the result we have achieved mean the company can look forward confidently."

Its Colombo street property, which was substantially damaged in the 2011 Christchurch earthquakes, is a key asset on Smiths City's balance sheet and its redevelopment will bring the company's retail footprint close to pre-earthquake levels, it said.

"In the three years since the Christchurch 2011 earthquakes, the company has made significant progress having earned profits from operations of approximately $15 million, reopened all its trading locations, completed refinancing of the finance company and maintained dividend payments," Boyce said.

The directors declared an unimputed final dividend of 2.5 cents, to be paid August 15, bringing the dividend for the full year to 3.5 cents, unchanged from the previous year. Shares in the NZX-listed retailer rose 8 percent to 54 cents.

The company is moving into new premises in Palmerston North and Rotorua in November and said it is considering expanding further north, to the Auckland market, with structural changes to the organisation meaning it was well positioned to, should an opportunity arise.

(BusinessDesk)

Comments and questions
2

Um, I think that headline is a little unfair and misleading to be frank. The reason for the decline in profit this year is not due to the small 0.8% decline in sales but rather is largely due to the one off insurance payment (5.5M) that was received in the previous financial year that had the effect of inflating profits for that year. Take that out of the mix and profits are actually up, but remain flat wrt to 2012.

They've done OK this year. 4.1 mill profit after tax EPS of 7.7, NTA of coincidently 77, suggest share price of 54 is slight low, maybe undervalued somewhat? Time to head back up to 65?